---

Guest post by: Timothy Ferriss Become an Author

Tweet

---

---

I met David Kutoff in Omaha at the Berkshire Hathaway annual shareholder meeting, and he asked me an interesting question:

Do you think that the value of time can compound like interest?

Three glasses of wine into a post-event party with Cirque du Soleil performers, I didn’t have a good answer, but David recently sent me a thought-provoking e-mail I thought I’d share.

How might better use of your time compound? David explores:

Bear with me, this is somewhat rough at the moment — my initial quandary was whether time, like currency, could be invested to produce a compounding effect. After a bit of thought, my conclusion is that the value of ones time could experience a significant gain, and perhaps a compounding effect over time, given an investment of [that present-state] time in knowledge, skill or other capacity, and a reinvestment of future gains (just like currency).

Money and currency — accumulated excess money — represent one part of your capacity to transact in the marketplace, and can be exchanged for help from others in the form of products or services, including “things” like consumables, depreciable and appreciable assets. Similarly every action you take, whether it be transaction-related or not, requires the expenditure of some amount of time, which is roughly fixed for all of us (say 10,000 working days between the ages of 22 and 62).

Much like currency can be exchanged for appreciable assets that can grow with a compounding effect over time if the gains are re-invested, my theory is that time can be thought about in a similar way, which may lead to more effective action.

To put this in terms of your thinking from your book, lets say you work 40 hours per week simply performing tasks requested by your employer, none of which produce any additional future potential for generating income for yourself.

This is the equivalent of spending your money on consumables or living expenses. It’s single use, and gives you no real future gain, aside from whatever currency you might earn in the moment. Now, you decide to outsource 50% of your tasks to India, producing the same outcomes with 50% of your time. You just doubled the value of your time compared to before (less the additional expense for the help). Now, with that free time, you get more rigorous about working out, studying, and building your networks. You increase your energy, skill, and capacity working with others and manage to produce yet the same results that were taking 50% of your time with only 30%. If you keep reinvesting some of your time in additional gains in your capacity to act, you can theoretically have a compounding effect with the value of your time (rather than time itself). Just like investing currency, the earlier you start this process, and continue to invest in your capacity, the more time your capacity has to compound, and the greater outcomes you can produce during your lifetime.

Related Articles

  The XYZ of Adequate Returns in Super
  Pay Yourself First
  Nice feelings don’t pay the bills!
  Treat Your Internet Home Business Like The Investment It Is
  Value Longevity
  Financial Tools To Build Personal Wealth
  How to Use Hyphens, Em Dashes, and En Dashes
  What Is Financial Literacy And Why Is It So Important?
  Get Out of Your Way
  Believe In The Vision Of Your Best Life,Taking Small Action Steps To Create It
  Which Would You Choose If You Had The Choice?
  Why Did You Decide On This Business
  Is everyone else getting wealthy off your efforts except you?
  Small Steps add up to many Kilometres
  How Can I Grow My Super?
  Time, Money and Life-Balance, Part 2: Money!
  Consistency is Key
  Double Your Money Einstein!
  Jazz Up and Energize Your Vocabulary To Increase Sales
  Increase Sales By Jazzing Up, Energizing and Limiting the Words You Speak and Write

Related Forum Posts

$1000 and a stupid idea
5 Entrepreneur's success stories
Re: UPDATES: New Campaign! New Layout! New Ideas!
No B.S. Time Management
Re: What would you do with $500,000 or less?

Share this article. Fund someone's dream.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

First Impressions Count

Why Small Businesses Don't Survive

Leave your Lizard Brain behind.

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.